If you have been in the cryptocurrency market for some time, you might have heard of the Bitcoin mempool. This is clearly an important part of Bitcoin (BTC) that would help you understand how the network works.
In this guide, we are going to share with you all the information you need about the Bitcoin mempool. Not only this, you will get data on how to analyse it, where to look for it and many other things. If you are a cryptocurrency analyst or just an enthusiast, this is going to be an important tool for you.
What is the Bitcoin Mempool?
This is the basic question that all of us are making: “what is the Bitcoin mempool?”. The answer is one and is very simple: the Bitcoin mempool shows information of all the transactions that are waiting to be confirmed on the Bitcoin network.
These transactions are pending and they should be included as soon as possible in the next Bitcoin block. The larger the Bitcoin mempool size, the larger the number of transactions that have not yet been confirmed.
The Bitcoin mempool can be analyzed through a wide range of metrics. The most important ones are the following:
- Unconfirmed Transaction Count (this is the Mempool Bitcoin uses)
- Pending Transaction Fee (the fees that will be given to miners)
- Mempool Size (how large is the bitcoin mempool backlog)
This information about the Bitcoin mempool is certainly vast and can be very helpful. We can understand the congestion of the network at specific times. This can be then linked to other factors taking place in Bitcoin and on its network. You can see the Bitcoin mempool chart below.
When we send a transaction using Bitcoin, it needs to be processed by the miners. Miners are those users that are in charge of confirming BTC transactions. By using specialized hardware devices, miners are able to process transactions and add them to a block.
Each Bitcoin block is processed every 10 minutes and it has 1 MB of size. That allows more than 500 transactions to be processed per block on average. The limit of BTC transactions per second is currently between 2 and 7. That means that blocks would be able to support as much as 4,200 transactions.
Miners get rewarded for processing these transactions. There are two ways for miners to get rewarded:
- Transaction fees
- Block rewards
Currently, most of the rewards received by miners come from block rewards. Transaction fees are still very small for miners to consider them an important source of income. Each block will reward miners with 6.25 BTC. Miners would not be able to operate without the block rewards. Instead, Ethereum (ETH) miners sometimes receive more money from transactions than from block rewards.
In the next sections, we are going to be sharing with you information on how the Bitcoin mempool works. Moreover, you will learn how to prioritize transactions and where to check the Bitcoin mempool live.
How does the Bitcoin Mempool work?
The Bitcoin mempool works in a very simple way. It just reports to us the number of transactions on the Bitcoin network that are still pending. Pending means that they are still waiting to be approved by the miners.
Miners, of course, will be prioritizing some transactions over others. But how can they decide which are the transactions they should prioritize? This will depend on the fee per transaction. This can be seen in the pending transaction fees in the chart below.
This image shows the fees that are still pending on the BTC network. If miners decide to prioritize transactions, they would certainly do so with those that have the highest fees. This is represented in the charts with the red colour.
While most of the transactions pay a transfer fee between 0 and 10 satoshis per byte (colour blue), just a small portion of the transactions pay more than 140 satoshis per byte. Nonetheless, in the second chart, we see that most of the transaction fees reward to miners come from the smallest number of transactions.
In general, Bitcoin transactions are 250 bytes large. That means that those that pay at least 140 satoshis per byte, at current prices are paying more than $6.78 dollars per transfer. This is equal to 35,000 Satoshis (0.00035 BTC). Although this seems a large price, compared to other crypto transactions, Bitcoin is the safest blockchain network in the world.
These transfers are related to large users that perhaps send several thousands of dollars. Bitcoin is permissionless, decentralized and secure. This is why users are ready to pay for larger sums of money to get their funds transacted. Using traditional financial solutions would not give users the same benefits as Bitcoin. It is also worth pointing out that no matter hor large the transaction is, the fees are going to be selected by the sender. Of course, it is certainly important to prioritize large transactions. That means that if you are sending large amounts of BTC, you should pay higher fees. This will make sure the funds will reach the recipient’s wallet in the shortest possible period.
Miners are certainly going to be prioritizing the transfers that provide them with the largest amount of fees. Thus, the red transactions are going to be pushed first and the blue and green transactions will have to wait longer.
Where is the Bitcoin Mempool?
The Bitcoin mempool stores transactions that have not yet been processed. This allows for valuable information to be used by analysts and users of the Bitcoin network. All the transactions that are shown in the mempool have not yet been included in a block.
The nodes of the Bitcoin network will be checking the validity of the transactions. If all the data provided by these transfers is correct, then they will be added to the mempool.
It is worth mentioning that there is not a universal pool. What does it mean? That means that each node will be receiving transactions at different times. This is why they will be processing those with the highest fees.
Users can get access to the Bitcoin mempool through different sites that are providing information about it. Blockchain.com is sharing very interesting data about the Mempool. You can check several metrics related to it. That includes Mempool transaction count, mempool size growth, mempool size (in bytes) and many others.
Another website that is going to provide valuable information about the Mempool is jochen-hoenicke.de. This site is very simple, but at the same time, it contains all the information that should be shared about it. You will find all the data required to analyse the bitcoin mempool.
This site is also going to share with you the Bitcoin mempool live. All the data will be shared and shown there. You can also select the period of time for which to see the data. An additional way to get the Bitcoin mempool live is to run your own node. We will share more information about it in the next sections.
What is Mempool Priority?
As we have mentioned before, each Bitcoin block can process a limited amount of transfers. When the number of transfers surpasses the number of transactions a block can handle, then the bitcoin mempool backlog grows.
When the Bitcoin mempool backlog grows, miners start prioritizing the transfers with the highest fees. The higher the fee the faster your transfer will be processed. The lower the fee you pay, the longer it will take the transfer to be processed.
The priority is going to be for those users that pay higher fees. Back in 2017, fees per BTC transaction surpassed $50. At that time, transfers on the Bitcoin network were so many that only those with the highest fees were processed.
The chart that we have shared above can provide us with valuable information about the bitcoin mempool backlog. When fees are higher, we should think that it is difficult to get prioritized by miners. That means that there is a backlog that is growing on the bitcoin mempool.
In this Bitcoin mempool chart, we see how there are four main periods of congestion in the network. The first spikes represent the expansion of the Bitcoin bull market in 2017. The third spike is related to the bullish period experienced in mid-2019. The latest increase in the bitcoin mempool backlog is now linked to the recent BTC price performance. As you can see, there is also a correlation between Bitcoin fees and bitcoin mempool backlog.
The bitcoin mempool size tends to grow when the market is bullish. When Bitcoin and cryptocurrencies move higher, traders, investors and retail users perform transactions. Instead, when the market is in a bear trend, there is less interest in BTC and processing transfers. Thus, the bitcoin mempool size is expected to be smaller.
The best thing to do while performing BTC transfers is to analyse the bitcoin mempool backlog. This would help us understand whether we should pay higher fees than usual or not. We also need to think about which is the priority we have for our transfer. If we want the funds to be delivered in the next block, then we should pay a larger fee.
If we do not care about the time it may take for the transaction to be confirmed, then we can simply pay a smaller fee. The usual thing is to pay the standard fee for a transfer to be prioritized by the miners. Nonetheless, the Bitcoin mempool is going to be very useful for us to understand which is the transactional backlog on the network.
How to Check the Bitcoin Mempool?
There are different ways to check the Bitcoin mempool. You can simply visit the sites we have shared to you before: jochen-hoenicke.de and Blockchain.com. Instead, if you want to know more information about the mempool, you can run your node and get updated information on the Bitcoin network.
Bitcoin nodes are participants of the Bitcoin network that transfer information about transactions. Full Bitcoin nodes make the Bitcoin network secure and they verify transactions and blocks. If you run your own Bitcoin node, you can get updated information about the Bitcoin mempool.
Having a Bitcoin node may not be so easy to users that do not have the required equipment. Moreover, users also require some technical knowledge to be able to handle a Bitcoin node. Using a Bitcoin node to check the Bitcoin mempool is going to be the best option. You will have trustworthy information rather than relying on others.
However, the crypto market is also providing valuable information to users. Blockchain.com and Jochen-Hoenicke have been operating for several years. The data they provide is usually very accurate and it is used by analysts from all over the world. This is going to be the best wait in terms of time consumption and useability to check the Bitcoin mempool.
While these two sites have some backlog reporting data, using a Bitcoin node would allow you to have access to the Bitcoin mempool live. If you are already running a node, you can start checking this information yourself. In the cryptocurrency market, everything tends to be about reducing trust. “Do not trust, verify.”
Bitcoin Mempool Conclusion
This guide aimed at sharing with you what the Bitcoin mempool is, how it works and more. You have learned where is the Bitcoin mempool, which is the mempool priority and many other things.
The Bitcoin mempool is going to be providing you with valuable information about the current state of the Bitcoin network. It shares with users data on usage and fees. The data can be extrapolated with other indicators to understand periods in which a large number of transfers are processed. Moreover, you can get data on BTC fees and understand how to prioritize your transfers.
You can also now know how to check the Mempool, how to get access to it and how to view a wide range of charts.